Currently, there are several healthcare expense account programs available to healthcare consumers that are typically used in addition to, and often in conjunction with, traditional healthcare insurance. Herein, healthcare expense account programs are defined as programs which provide a healthcare consumer and/or a healthcare consumer's dependents a designated healthcare expense account that is assigned to the healthcare consumer and is used to either directly pay for, or reimburse the healthcare consumer for, defined eligible healthcare expenses incurred by the healthcare consumer and/or the healthcare consumer's dependents. Examples of currently available healthcare expense account programs include, but are not limited to: flexible spending accounts (FSAs); healthcare reimbursement arrangements (HRAs); and healthcare spending accounts (HSAs).
In many cases, the healthcare expense account is a virtual account maintained by a healthcare expense program administrator or management service, also called a program administrator, either under the direct control of an employer of the healthcare consumer and/or as a third-party agent of the employer. In other cases, the healthcare expense account is set up by the healthcare consumers themselves. Typically, healthcare expense accounts are funded by the healthcare consumer, the employer of the healthcare consumer, a given health plan, and/or any combination of these parties.
Healthcare expense account programs typically help the healthcare consumer pay healthcare expenses that are not covered by the healthcare consumer's healthcare insurance such as: deductibles; the healthcare consumer's portion of healthcare expenses; co-payments for doctors visits and prescriptions; co-payments for medical supplies and devices; extended care and/or home care; and various other healthcare expenses determined to be eligible by the employer and/or healthcare expense program administrator and/or the IRS.
In typical operation, funds are deposited in the healthcare expense account by the healthcare consumer, the employer, or a combination of both. Once the healthcare expense account is funded and/or funding arrangements, such as paycheck deduction and/or credit lines, are established, the funds are made available to reimburse the healthcare consumer for out-of-pocket expenses incurred by the healthcare consumer in eligible healthcare expense transactions, typically using pre-tax, or otherwise tax advantaged, funds. In some cases, the healthcare consumer first pays the healthcare expense using his or her own funds. Then the healthcare consumer makes a request to the program administrator for reimbursement of the funds. The healthcare consumer is then reimbursed for his or her out-of-pocket expenses from the healthcare expense account, typically using the pre-tax, or otherwise tax advantaged, funds.
In some cases, the healthcare consumer uses special debit/credit cards that are directly linked to the healthcare expense account and/or track healthcare expense transactions. In some cases, the healthcare expense is paid with special debit/credit cards that are directly linked to the healthcare expense account and then the healthcare expense must be substantiated using a receipt, bill or explanation of benefits document.
Some healthcare expense accounts, such as flexible spending accounts (FSAs), are “time limited healthcare expense accounts”, also known as “use it or lose it accounts”. Using typical time limited healthcare expense accounts, the healthcare consumer must elect to deposit a specified pre-tax dollar amount in the time limited healthcare expense account to cover healthcare expenses that the healthcare consumer predicts will occur over a predefined future period. For instance, as one example, the healthcare consumer must elect to deposit a pre-tax dollar amount specified by the healthcare consumer to be paid into the time limited healthcare expense account for pre-tax reimbursement of all eligible healthcare expenses to be incurred in the next 12 months. In many cases, the amount specified by the healthcare consumer is paid by deducting a portion of the specified amount from the healthcare consumer's compensation over multiple pay periods. In other cases, the employer makes contributions to the time limited healthcare expense account, i.e., the FSA, and the employer deposits funds in the time limited healthcare expense account on a periodic basis.
Using a typical time limited healthcare expense account, it is important that a healthcare consumer predict and monitor his or her total eligible healthcare expenses and activity fairly accurately. This is because any funds not used to reimburse the healthcare consumer for a transaction occurring within the predefined period, i.e., unused funds, are typically forfeited, typically back to the employer. A typical second requirement is that all applications for refunds, and/or substantiation documentation, must be made/submitted by a date defined by the plan.
In addition to the forfeiture of any unused funds at the end of the plan year, it is often the case that even though the funds are forfeited, this does not eliminate the requirement to pay taxes on these forfeited funds if such taxes are required.
On the other hand, a healthcare consumer of a time limited healthcare expense account typically wants to ensure that he or she does not unnecessarily incur potentially eligible healthcare expenses in a given plan year that exceed the time limited healthcare expense account funds available. This is because once the time limited healthcare expense account funds are gone, any further, otherwise eligible, healthcare expenses incurred in a given plan year must be paid using non-tax advantaged, i.e., post tax, funds.
Consequently, it is often the case that a healthcare consumer would want to closely monitor their balances in their healthcare expense accounts to ensure that he or she does not leave any healthcare expense account funds unused, thereby forfeiting money, or that he or she does not unnecessarily exceed the available healthcare expense account funds in a given plan year, thereby paying eligible medical expenses with post-tax dollars and losing the tax advantage of time limited healthcare expense account funds.
Currently, many healthcare consumers having access to healthcare expense accounts do not fully understand the operation of their healthcare expense accounts and/or what healthcare expenses are eligible for reimbursement, or payment, from, their healthcare expense accounts. In addition, some healthcare consumers having access to healthcare expense accounts simply forget they have the resource available to them until it is too late to use it.
In addition, many healthcare consumers having access to healthcare expense accounts find it difficult to access, and/or determine the balances in, their healthcare expense accounts.
In addition, as noted above, many healthcare expenses must be substantiated using a receipt, bill, or explanation of benefits document associated with the healthcare expenses charged to a healthcare expense account and, in many cases, this documentation must be properly submitted by strict deadlines in order to qualify. However, many healthcare consumers having access to healthcare expense accounts find the documentation process both confusing and overly burdensome, at times spending large amounts of time collecting, copying, and faxing and/or mailing, documents out, all to be reimbursed for what are often small expenses, such as a $20.00 co-pay.
As a result of the situation described above, many healthcare consumers having access to healthcare expense accounts find their operation confusing and use them improperly. In addition, because of the confusing surrounding the operation of healthcare expense accounts, employer HR representatives and/or program administrators often end up devoting significant amounts of time to answering questions regarding healthcare expense accounts. Consequently, many employers are hesitant to offer these programs and many healthcare consumers having access to healthcare expense accounts consider the healthcare expense accounts too confusing and time consuming to be worth their effort. Therefore, many healthcare consumers having access to healthcare expense accounts do not take advantage of these well-meaning and potentially very helpful benefit programs.